iRobot (IRBT) 5 May 222022 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to iRobot's First Quarter 2022 Financial Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Andrew Kramer. Mr. yours. is floor the Kramer,

Thank you, everybody. Good morning, Chelsea.

Joining CEO, President Colin today's call and Chairman and are iRobot's Angle; Julie me Zeiler. on CFO, and Executive Vice

for risks today's Before to that note the made historical on are set statements agenda and Securities Litigation and Reform of are harbor information start subject that of that forward-looking made to from those factors I for results the safe call based Private I many the like the by expressed statements agenda pursuant provisions not actual or today's to uncertainties materially today's XXXX. involve to Act cause implied are call, These would statements -- could on forward-looking statements. such differ

Regulation income risks public financial our Related share. uncertainties in a whether Exchange believe call, non-GAAP we including and and non-GAAP provide found help as result that update will obligation iRobot's and operating Securities statements, new these tax margin, into non-GAAP operating filings underlying circumstances. SEC non-GAAP and operating during the G, operating performance per iRobot potential. revise by defined non-GAAP profit information be our certain to non-GAAP undertakes Commission. no non-GAAP gross loss, as financial reference conference of or disclosures and to can rate financial information results this effective and expense, non-GAAP Additional forward-looking loss with measures net margin, income our We these additional on or transparency

that will Also, provided of prepared first is historical first and we end at well comparable issued be be at release all as measures a with which financial the these will non-GAAP only, reconciliations remarks first outlook to otherwise, most press financial definitions conference and comparisons GAAP quarter today's of financial the in as directly XXXX metrics these non-GAAP the end quarter in available on at our of our are results each stated financial and call provided evening, website XXXX. financial the measures our on on are unless last the basis measure of XXXX these of www.irobot.com. quarter Our the metrics non-GAAP financial discussed the tables of

and In year. posting also on summarizes quarter, prepared the remarks halves to including addition XXXX XXXX the press all posted second release relevant for website, assumptions financial today's document we've modeling our the full outlook our that the fiscal and first and second a

we're the steps XXXX open taking call will remarks with elevate commentary customers conclude responsiveness profile. cover over company's our additional our achievements review For insight an in discuss the guidance. today's be market for Colin improve about XXXX. for this results, and will into some detail At important to and call, results conditions Colin financial Angle. I'll financial first call closing to our follows: and quarter turn agenda that update will briefly will our recent the we'll point the Julie Colin questions. profit to as provide expectations our on our our offer After and

first revenue on operating thank us. of joining XXXX $XX.X share Good a loss loss morning, and we of $XXX you a reported and for million. Yesterday, $X.XX million of per net quarter

targets, Our primarily exclusion our management. QX EPS our exceeded and February and tariff cost profitability prudent due recent to

U.S. year lapped and that Japan. we as ago. decline us in This benefited region XX% performance largely a growth XX% exceptionally strong in offset helped line growth top from X Our quarter solid the in an in EMEA

progress strategic believe important will made revenue anticipated our contribute also in that FY 'XX. we to and growth We EPS

Russia-Ukraine in the inflation EMEA, of marketplace, to and customer the stemming complicated particularly are ongoing to consumer FY by confidence heightened reduced a from our However, prospects primarily 'XX due growth disruptions combination war.

top 'XX line these the Although FY profit emerging EPS end we operating our growth limit have year and slightly high targets. full increased ambitions, will of dynamics our

like GET, number detail, our is more outlook GROW to review in succeeding. that a our INNOVATE, KEEP, updated of cover we strategy QX I Before I'd believe accomplishments demonstrate that

our product thoughtful the lines, convenient experiences range our our March, to The far which is X.X our pragmatic commercial The we believe iX mapping of us get robot them smart to a our markets software on operating Roomba around [Technical drive In plans differentiation trends we first fortify the world. delivered can winning on component Difficulty] new RVC thus beautifully jX that innovation strategy midrange series intelligence released hardware. the and enable our increases that element identify about of across through sell-through Roomba offers designed of strategy version high-performance, differentiating forward, and our is all and software successfully avoid. share our new of in going customers. as the that as will objects into well Based year to platform, key

customers to our term. digital connected be XX% into have by our the Customers key are increased a our million case. who period products our continues part franchise During same consistently using ago. we over That XX.X sure of QX, of year opted communications number strategy robots. and over floor to our of customers love remain the The making our involves the that care part the long

utilization XXXX over just quarter was First XX%.

XX% recently of the the taking Roomba that pleased since ever-expanding iX launching that increasingly number objects. year. new mapping series our also vision owners the Roomba avoid of an jX machine advantage and are robot detect increasingly customers owners Over using added. software capability to last are we Our capability We're of are jX new using smart

users us iX EMEA by The our in lifetime increasing is total in ownership. often increased end the adoption growth element XX% of iX the out on expect and transact, strategy focused before rolled new was of represented customers more value by to of revenue. Direct-to-consumer customer of EVO course revenue their XX% having QX directly over the model QX. as grow continue to We with

app approximately for XX% versus use years. generated that customers our revenue Existing seeing DXC period over supports a DXC in connected and the several same growth This is substantial the customers trend a of are ago. to and promising plans accessories. our our XX% We next connected our year products website increasingly buy

addition, small-scale our conducted launched meaningful digital made in of our and and We of tests several with transformation U.K. initiatives. website new a In our we QX progress tools. version CRM related systems

of revenue. are integrate advancing our QX to In diversification, purification terms million air product Aeris we efforts business, contributed our the $X which to

which profitability. operations with commentary outlook In our that our steps our anchored the elsewhere. more better call, our threatens help commercial call. responsiveness our overall addition has and while for customers performance. second rising us to detail consumer R&D our become has half Europe our curb consumer impacted across remained half growth confidence second later cover last accomplishments, February, have our this inflation and to Consistent advance category spending, we market conditions XXXX rates, our into these in eroded increase notably in view to this will initiatives further substantially I'll Russia-Ukraine growth on and more by Since plus challenging, enhance key took and expectation conflict however, in

anticipate of the offset these expected in that half essentially category decline. year half this we growth modest Given an will EMEA second first during dynamics, now

double-digit by Japan. demand low assumes strengthening category in America, expansion RBC now outlook updated in Our North complemented

growth is we EMEA, which XX%. of equates Much we revenue to revision X% full anticipate of to FY in our billion, mid-teens have result, top that As to a we revenue prior moderation at $X.XX still line 'XX low range annual for plans complemented the this solid of expansion, tied $X.XX lowered least from growth. category year Japan. targets in expect in to expansion region growth the by where now billion 'XX, considerably in faster U.S. assumed Despite double-digit even anticipated this

targets. revised have We full XXXX our year revenue

by that revenue, the now of with in margin translate to field forward of expect XX% is working. last that manage XXXX will although the second margins a also a which than we better second second second low component constraints. with half convert XX% $X.XX margin, Along half, operating year's into confidence profit our into which half meaningful moving optimal, X% our plan a operating year X% relatively profit we is While ranges to to less that half double-digit growth we still been enable gross summary, half of had soft carefully In spending, we $X.XX. over us second anticipate acceleration strategy today's revenue to full in are to year from will EPS impacted playing

Our competitive position is strengthening.

Our connected customer grow. base to continues

and this year are Our directly how years putting happy, to in we to come. and customers much us work systems customers to these increase with are spend new

call now That As we believe to momentum long-term a to financial improved the and half remarks. Julie. profitability concludes the will with revenue initial trajectory anticipated year necessary our targets. our the us that enable turn my I'll to achieve end second over result,

Colin. you, Thank

and done As basis. Andy financial on a of mentioned review be our earlier, results will non-GAAP my outlook

XXXX and distributors. from delays retailers due So each and to iRobot's with operating order slightly certain other XX% first X% mention remainder. XXXX, revenue tax quarter our rate cancellations quarter against of per EMEA and quarterly are otherwise corresponding loss, the share unless Roomba QX and up unanticipated and and generated metrics, products of was will comparisons our stated first loss From $XXX mix, income otherwise, perspective, profit income of expense, gross the operating product mean and the million mix of operating non-GAAP margin, margin, making while Braava a declined revenue behind color February unless net noted. effective

in first see We grew quarter. strength continue in our robots, which over the to premium XX%

of the approximately margin February us due reinstatement the low gross which XX% our outlined million. primarily we of target to exclusion, tariff XX.X% in saved Our $X exceeded range

raw warranty offset gross factors, year. points percentage benefits Our was and materials, in The declined in of promotional intensity product increases and several order the which tariff QX from unfavorable the driven reductions our transportation higher mix. comprised expense. exclusion and margin period decrease and same magnitude, to nearly than more X lower last pricing combined These from componentry, by

exclusion tariff October XXXX, In beginning exclusion XXXX. were on continuing Roomba Section in from December terms late the List This exclusion, China USTR. XX% products tariff and the the we by Tariffs XX, granted imported X XXX temporary eliminates March a of until on XX, from

the on of for refund and We October in XX imported timing million the XX. we expect next refunds to receive payments tariff refunds XX million Customs are and $X after quarter and months, Custom. on-hand that any for approximately imported sold paid the received million $XX will issue all paid, comprised exclusion, is expect tariffs $XX of over which products our fourth for at Roomba U.S. we of million, of year in last U.S. to October discretion inventory Similar XXXX after the the although tariffs multiple totaling QX payments $XX

personnel increased to costs. million costs of attributable operating XX% $XXX and working sales programs by quarter increased marketing expenses XXXX First due and to primarily marketing higher

carefully to our continue first target for of revenue mid-XX% were range. QX Operating in the our We costs XX% the manage versus spending prior quarter. of

loss QX $XX million. Our operating was

loss Our primarily X%, reflects first approximately investments, from and $X.XX. rate first and decrease the quarter $XXX year-end. million $XXX tax quarterly loss ended net effective short-term changes in was in of We and The unfavorable per share quarter net working cash decline our the million with a was capital.

have received the waiver is This of revolving facility from will to our covenants plans credit We increase credit. certain unsecured that upsize of our $XXX our flexibility. first and a million amend part ultimately fiscal line near-term

X the extent, an a increase customer of of of within the from ago lesser quarter. to XX same DSOs due quarter the orders to primarily period timing XX and days, days mix First year

at of end $XXX Our last at or versus first versus or days balance, also missed QX the days XXX plan XX reflects to over XXX levels inventory will inventory days into the year. inventory the end key us our additional end through X sell same still balance stay delays before representing measured million of improve quarter that by inventory skew customers and to of our help year-end. to fourth increase continues the at the the last next $XXX inventory will The in our expect We XXXX. inventory with our of promotional XX-day commentary showing XXXX quarters, windows period million dollars days this was last the improvement range due year. elevated the to healthy inventory quarter In-transit shipping low that QX an last year. quarter, in which Consistent we

to XXXX our review complete, like outlook. the on quarterly focus With updated I'd

contrast million We to currently our Given revenue for $X.XX to now in QX first to approximately half In half marketplace, last same decline from targets our our believe million. rate revenue XX% growth range will European revised consumer XXXX in implies the billion XX%, revenue over to QX be expected well We the second FY $XXX billion. period that $XXX the generated last digits second revenue our XXXX double teens the of potential QX from an to growth half, high 'XX in $X.XX which range XX% disruption above revenue in anticipate of the between anticipate we year. the QX XX% growth range and and that. X% low year's will rate over of the

As that was prior against outlook impacted the our to availability we remember period look will it important half compare that ahead, is by of components. XXXX year limited second

Our ability support improve continuity this we've existing by steps taken to are revenue the to half supply year's levels targets second and and underpinned chain inventory resiliency.

half the revenue generate million with product on than track In over coming air the of purifier that second diversification, more we remain of to year. XXXX, of terms XX% $XX in in

a of of especially the targets. since full orders second why That's basis year. shift any may As to on annual a year focus on investors larger between our we quarters, business timing we encourage half reminder, our the manage in

contemplate revenue roughly rates expectations and rates, end minus euro Our in yen with exchange X%. plus or line quarter

this Our our our our full more we margin in anticipate half revenue benefits exclusion we to half to to sales. cost some gross of will reinstated, as not costs year despite from We margin year. the second million into productivity tariff at of the have and had been to If first is our XX% lower improve shipping the gross XX% would costs outlook $XX leverage unchanged see higher pay range, on levels expected to change than initiatives, begin XXXX fixed XX% primarily XX% tariff that targets.

anticipated burdened our supply tariff-related by in reflects of half costs. will plans and our savings outlook intensity as to updated the of on-hand us as savings inventory help approximately support down both category Our revenue incrementally lower plans sell-through. redirect promotional to of higher The our was growth absorb increase to of the work increased our impact well remainder that chain

goods outlined, Colin optimize next margin take to and a to gross improvement we year. actions continue which expected in have are sold, As of range cost will taken of support a to meaningful our

as seasonal expect XX% and be at more between fixed XX% our gross and QX increased QX lower with costs. favorable intensity mix will shifts improved to than We than events promotional on channel margin offset associated leverage

of of XX% targeting operating $XXX in costs to or $XXX million XXXX range are million We approximately the revenue.

plans to and better marketing We programs other cost structure have anticipated our optimization and adjusted our accelerated hiring align with working cost revenue.

profit line top X% our with from million to spending margin and between X%. operating Given guidance plans, [Technical $XX and an creating ranging Difficulty] $XX million

million second spending gross and margin $XXX $XXX to revenue. enable $XX our we implies between loss to million of QX of of of $XXX stronger to total terms anticipate In or of $XXX million. operating combination revenue, prudent XX% million costs second to quarter This The and operating to $XX XX% million. million improvement an is spending, us deliver substantially operating expected income half

for of tax of and other we of rate other expense million XXXX, X%. an terms In effective anticipate notable around $X approximately modeling assumptions

As a in a income, changes effective those pretax along diluted small approximately the jurisdictional of meaningful profits relatively in count can mix million rate. tax reminder, XX shares. of with changes the anticipate We cause share dollar

we $X.XX. to range year As to a EPS now from result, expect full $X.XX

top line trends $X.XX. disrupt loss EMEA to per growth in our summary, moderated the quarters. reflect for we've greater QX, For and net to RVC a share coming and events between macroeconomic In anticipate over adoption, potential $X.XX we particularly temporarily expectations geopolitical

XX growth will call still for meaningful notably, and in the this profitability of thoughts near-term our enabled us a anticipate our half process. profitability, additional our We top range. to the we slightly preserve the of have turn increase high some end which to line year. second now our during Colin taken I Most inflection EPS back actions has on to

Julie. you, Thank

penetration design relationships. we and drive and we products proposition. progress contribute deliver our increased consumers As our differentiated enjoy and we with will is meaningful the and very also retail that to support connected world. will iRobot. a around and and RVC of expanding leader, to category expect chain elevate optimize about with powerful are capabilities category to our worldwide consolidating the transact short-term customers growth value our continue both With commercial evolving and mobilizing profitability, more responsiveness, a resiliency. are margins, Household potential DXC creator retailer distributor inventory To a We've efforts compelling increase the are we Across efficiency, around We great growth warehouse through brand, revenue be directly the as areas gross consumers And vibrant networks made to increase to for all of increasingly to in access global low. -- world. and enthusiastic supply company, great higher and the levels navigate efficiently we distribution needs and our the us. continuity partners the we turbulence rapidly

While Section of we the to thrilled production end unchanged. our the Exclusion that are XXX scale through Tariff USTR year, reinstated Malaysia has our are the plans in

result, a XXXX to meaningful tariffs. these without enter we As to expect exposure

Additionally, that additional impact spending helping year. believe a 'XX, ongoing we are and to not us deliver plan for those believe sacrificing FY We business. model discretionary while longer our Roomba over term. plans to will further R&D major targets And in new make the projects this and carefully still spending this headcount for upgrades year's software bring are investment we the refine biggest control that on our manage efforts adjusted and we structure to market we cost efficiency, our have critical achieving profitability improve overall

realign targeting product of categories. allocate diversification. internal further more More development for robotic engineering important are products adjacent We taking continue support specifically, to and funding new also resources to our steps we

these insight premature now, to we to we right offer closer to into activities commercial sharing additional the it'd be future when more in launch. look forward are While

As substantial financial our assumes second performance. half Julie guidance detailed in acceleration XXXX our for updated a

We And this the in remarks. Operator, concludes to take the that to year toward long-term expect enable outlined. this That shareholders, process, us we've financial are us the value customers. our questions achieving exit we now. momentum on path create our employees well-positioned and to will keep substantial for targets ready

come Instructions]. And will Capital Mike question first our Northland Markets. Latimore with [Operator from

of are you year, kind well? consumer in assuming in half guess remain outlook deterioration bit I factor you to trying relatively second of Or markets So a of for little as healthy? terms the and the are that Japanese the the there sentiment U.S. of

We see down Japan but North from performance targets the as still anticipate year in the remaining We've our taken good very North America. healthy. modestly, beginning America of

So industry. traditional overall the to but still rates, slightly growth that below contributing in growth

hesitancy? Okay. half more in devoting competition? promotions, this deal reflects Got to tariff consumer does that that trying to Or exclusion with then you're is about And it. a just more the of

It's our to of we some both. than more we a good are looking events some year The the little maintain basket position had ensure that our challenging resources events of in and markets. working definitely strong has and at

out as is to get can some others customers their remains chair continue it so that of in to competitive category of and as our motivating it definitely lineup growth make be. And help sure to and and this drive come is

And that and continue a runway ahead there the important are believe think rates look the and growth. penetration category additional ensure investment as that of we at look overall strong potential for to there our is is to to to us at adoption. category, remember for long foster we able we I And still it's

robotic view I latest about development really the maybe category? the about on last can't the mower products. but just lawn And on you talk internal know that, Great. new of comment what's

industry. beyond -- beginning ambitions robot that again, the vacuuming. at are certainly think iRobot's extend robot the of we I

lawn. We have specifically talked about about, yes,

We market. lawn is a continue very to adjacent attractive think

front. And development products. attack so that well anything new has think certainly adjacent I us iRobot position multiple don't enabling of on changed continued technologies, to

with from Needham & Company. question will Our next Ricchiuti come Jim

just is questions promotional a exited spend, related a it changed were how marketing QX. about promotional in mainly the on the wondering couple over you of year? set what of a to terms that question earlier in balance versus the the assume that in thinking is, And QX. is of activity. Just I I'm year, as for think the be as change going activity to you we North America concentrated of it lot the

data-driven, around What will ad see return best. we're on you very that spend geographically we look moving As globally. money and the spending know, dollars that and we is the to optimize it us try are you'll to ensure where work at

And has that so of definitely that the evolved the from beginning year. --

models, in frankly, -- As constant ways is channels dollars spending of a well and which evolution as on at looking which day-to-day on basis. our a

revenue, So dollars with think change but our expectation absolute I way we spend around the those very dollars that fluid. the is

should business, And How a of that might part demand wondering but doing a Just joint Obviously, be driving get product? of is Aeris to assume, full consumer we the going. just I'm going is rebranding of question as Aeris. with on terms that that year to we part small Roomba the how important in and see effort marketing activity the that you're some contribution? to the

reason the to is the second underway. efforts fully why of year the the air certainly, into the the than half completing integrate we're the a Well, -- -- performance half iRobot for because completing doing integration, is the one line ratio first purification product Roomba larger the Aeris to has reasons

-- the part belief So our as is first absolutely is our of and we a marketing that direct-to-consumer that as far underlies your sound. that customers strategy, And which question into as joint -- bring forth, is so franchise.

and live their the technology air that a first opportunities adjacency. their better -- enables just the understand with synergistically have homes our require that and customers' they customers customers habits us we and things to needs, lives, develop operate bought to how is they more create with sell and purification better and those with powerful the challenges a software Roomba our to to their unique how partnership our beyond As

And air can our ways purifier definitely Roomba core different an look customer an to can to is of idea that lead we lots a strategy. of to existing sale that this we happen. make that at So a

Chung will Our come Paul with next JPMorgan. question from

And the of as on there being these guide? well? What's into seeing half customers your for some guess, then Japan just of you Europe and in then, confidence strength orders order regions Are second driving is visibility kind out? your how your So cancellations other pushed visibility regions in evolving kind are of Europe, I And the North key are for have orders besides kind America? and today? of relative And firm what for? what's you kind again,

I'll like. start, were some add if we and the can the in orders EMEA, Julie, you in color about you talked were that I pushed, mean call some canceled.

EMEA As broadly. for that we the the single we're the indicated, largest is in change guide seeing driver the weakness in the marketplace

And aggressive. product decrease so becoming drop the seeing our in in conservative in war inventory with increase in sort that time definitely correlated more confidence, creating impact less of in sell-through of consumer Ukraine and taking the very to rates a and positions retailers inflation that we're becoming lead

current we with the retail presented. of attempted crop partners And able so see which with engaged and order we with they as relationships we're what beyond to extend well, that expectations have are us our well a orders conversations and year and around the dialogue signs we're confidence from what guidance full them, in and they our our We these to that have adjust which distributors have expect the nature partners the definitely includes lead of in are gives so when And as seeing. our appropriately. perspective our as we to model that do throughout history immediate they what understand

strong us see see It's balance make of the there that not is best a products it's the of we at So had. has just history collaboration, competitively. very which half this the of back is has, that We year believe to a leading to of what those share that uncertainty through our the lineup because laps very indication ever as we going the honest, weaker year. year be rest the showing buoyed to unfold. to significant the company holding trying based decades we much confidence are rich the But We the half how best still point, our performance also frankly, to But happening of on perspective, year. from conversations. a last of up buoyed back think have well is

call the we percentage is of comps certainly growth relatively first than straightforward And are a contemplating earlier were half the ago, momentum strength. when tremendous we easier that enjoying the year so in and

So all, the unknowns that to have challenges confident to I reasonable expectation, our the think we expectation best in. that we an done and deliver in are and all create the goods balancing a

Yes. I'll just underscore of a couple things.

those As ongoing Colin into growth for our we gives year. rebased of that in It's the be setting said, balance expectations again our us factors category we to that and the supporting as view. things. now that picture we've will full it's of Try reset we've taken that all account series the best full a for investing were year. And in knowing

Where in component range? starts from maybe away, more tariffs Great. and of cost OpEx margins, a where to think normalized there? structurally maybe changed, we going mentioned Or And longer-term can but Day just on the follow-up lowered maybe you here? investments there commitments you any are Analyst side, have are higher OpEx on cuts cuts then on mid-XX% the growth recover 'XX show your progresses from the continued making trade-offs If it move And gross to freight you about you've some R&D, down, there? guide. seen And they then has manufacturing. to margins. And on that costs since easing, something coming in kind what's back

half our puts and path progress start, that towards back Investor I'll over look a forward we with then believe and then don't we Colin Why the first LTFM jump us But sure. our let I we those on Day. 'XX, targets half. that making margin as in 'XX are Yes, expansion around through gross our we And in. expectations second established in

headwinds that that see some multiyear hit normalizing we on of and of the saw. over a period, we we that expect easing them of You will already some

with We continue just levers, to some that focus point have of we to organization margin our the rest of a working from CRM LTFM. rate over of should look partnership that productivity and -- third the are team we in as COGS gross expand an our our line. reach to the as some our in is And drive would strategy parts I then direct-to-consumer keep time our operations on forward and grow which expansion across the provide to thing the

to believe reaffirm rate A margin then, operating base, our to. that this slightly We We'll in on we confidence still of where holds. going that November. that, to that rates laid reasons And I the out us income model rates, that Yes. again, those gross than that, that other little be we commitment deeply we committed to go. rates, looking to that a is lower just long-term answer financial growth best the are exiting shared Julie at but all think LTFM think year give the things

you then another It's question OpEx. And asked true. around

of the and continue remain to already and put it made extremely the year. we we data-driven very they as But is innovation center innovation well with of about do year. mentioned, our speed is how very do front go things the the the to doing investments think in We Colin on easy and we're for aren't We and our in committed our work at choices as where expectations innovation that of one what evolve how we and will we we associated think have cadence difficult choices. those the and center of that spending through the investments. I R&D we're -- resetting is

next Citi Global Markets. Merchant Our from will Asiya question come with

benefiting I'm to you relative I of guys that. basis at is pricing at are higher net intensity. shifting where happening. on or a promotional trying growth the just you're basis ASP start the guys year, intensity, same you about the because robots, which to clearly to And guys premium driving then just on But you time, promotional thinking understand about were -- you the talked

to And fiscal forward 'XX, shift how your how long-term are your thinking well guidance I you ASPs in ASPs kind units that mix just towards units think as guys versus you So benefiting guys about of updated roll versus you? you then targets and to on about just as net trending is are growth mind of -- in talking inventory down. sorry, you guys reported? impact on that that promotional know the effect guys effect balance. I impact have balances the a versus anything you follow-up But inventory there keep how about

Sure.

a we units, about ASP. number units as that think versus a now in will So the year, in of continue single-digit to of look growth anticipate for we products forward things, the we balance ASP year, Asiya. -- our And we do full mid-single-digit a our for as mix role Certainly, of ASP is low growth the there. play

channel which As pushing premium we've sell the we been those you up also but to with the said, products.

there So direct-to-consumer well. as -- we as had pricing benefit our our from business grows,

end trend of we in As remain down by it days the relates XXs terms inventory, do in the the year of X Both remarks. of and quarters said to elevated, I will prepared expect inventory. in the then in days dollars as and inventory into our first through

we will and inventory we at said inventory that course As through that expect we move is we've of that as look the healthy previously, events. that normal

Event? margin take just you and about about out at -- gross levers have guys as why I investors not should think Great. higher of raise the kind growth are know laid you about drive that given or several Analyst category you that maintain share, these targets margin. your But margins And just promotional the or intensity to affecting negatively talked guys as guys you the to you have talking that operating

the number as that think LTFM of we as how evolving competitive well built dynamic tailwinds contemplated an in it. I a

of competitive the growing strength. us investments, that R&D fruits so giving see our we And

X that a -- as I sorry, margin toward meeting managing we little we price promotional rate and as intensity to competitive think OI we maximize levers dollars gross shift will in our 'XX move that are forward. targets ensure the bit

challenges it's use number So these find we -- and do a on differently the levers the different market in. we situation of depending have and ourselves levers slightly we

to our we with in commitments again, line want ensure year, the at we want for profitability So gross committed ensure to the we answer. share. priorities margin nuanced We and look are But for deliver we we that our rates a as the on right it's what are we to that maintain now, that year.

that's we are ourselves put intend we so LTFM the acknowledging And demonstrate we feel for today, to in margin point a that setting good the half, where that acceleration we gross for back street. rate set the up on

Instructions]. our Bank question next And [Operator of America. will John come from with Babcock

like investments couple in while the you years not just same to a of little the started side, software a I guess, increasing extent. I actually, continuing ago, maybe hardware want bit on to invest I understand just first to think is

since understand, innovative. think consumers this helped found -- but excite same new least were to consumers to enhance to new like generally then, also like they the position the helped competitive marketplace? that I your features, Have they has this I like you things the because So obviously, has have found in want at you and at time,

I in translating your of So mop? into are investments in overall software how sense terms to get want that like competitive those in growth

great to question, address a I'm happy It's it. and

wasn't the the how at what deliver operated customer when well for priority years as of robot of ago, As looking missions consumer as ability environment setting where, cleaning to crop mission. clearly, a requirements were the that on robot's was looked off the we which pre-cleaned complete huge in an necessarily to Roombas and to ahead and its the current of ability on the customer satisfaction, several the failed robots control very they

machine so in and the the #X of iRobot in And and subsequent intelligence in to to markets, seller modest. We're but difference very that in the the challenging X are iX artificial tremendous, a technology jX many from is benefits hardware those to we of robots, our North jX and and The into leap our America. is where including AI between a difference in models that relatively between robot the also perspective seeing the being learning. harvest beginning strength be issue, investments the recognition jX to intelligence played technical able Plus pointed

receiving We robot exceptionally very unique seeing on we that robot on that utilized. that software are features the robots features being strong unique Amazon introduced -- highly ratings. class and seeing those of We're

of fact that of marketplace have that we we in of And based a intelligence sustainable a way, validation And robots. able perceived. well competitive and our in the the gives confidence so we a really are R&D the strategy, to insights investing validation this the advantage on we're on we're that's seeing that robots continuously those investments, us upgrade the software our our

the to an room robot major coming that an user. the last As functionality with directed new out cleaning iX i-purchaser benefit of year received example,

if feel one. of a to delivery our And so to question differentiate. ability we to we platform our like a have Happy customers accelerate follow-on the you have innovation do accelerate and to

what next of I and guess I focus No. But last up the to I'll there, that. great. about mean certainly any with able follow the that's news to time really particularly I might to might with on able if was you talk I wondering that, disruptions on supply know I chain. on that be provide but in if sort shutdowns like compares China. what due be now. in some quarter, how of mean, don't that's question you you're around on seeing wanted there's update I

iRobot second a challenge and we forth. our longer-term to us I guess issues, has partnerships shipping take ability ago, our issues, components to aggressively a the securing with ability the there. our chip key suppliers, what start jumped of is develop starting source consumer of longer-term chain company partnerships out so supply Sure. and every supply advantage faced there to tech most that shippers on And of to better shortages give Okay. many and year with

from efficiency. perspective supply year shifted our so that supply And efficiency later we having balances with a chain pure perspective a to substantially here emphasis are a on chain resiliency

have We commitments required line shipping inventory right gave point to shortages. shutdowns some sight for to year us given factories it's we costs. in But through that been raw have reinforced we at and definitely was inventory organization material a through ago But where of XX the this have sporadic foreseeable headed believe We certainly, that do now, partnerships we to not to has and we've that we the in given that easing task the in day-to-day the living is be frame. guidance a kind been There the the months continue manage challenges. and produce we back still up that's year And growing it so costs. chain We those component see that today. time the supply our in that and of to need. reflected see it

definitely woods, XXXX. out but the not are eased chain in last for were headwinds the of So us supply year the substantially

build done the need. sourcing, We will with Shipping work the we've we products. costs And have access that we to that we products more components of in manageable. we to are the need believe that have dual the all

That's the follow earlier next on And the questions on Right. of I to great. question, one want just up inventories.

are, can that least at And impact your I any It inventories can they If ultimately built talk that been about I then on how you levels? also inventory recall. having like do you up plan have can those without seems reduce meaningful to guess, pricing? heavier than

your color So on get that. to wanted I just

that healthy of into year. think we to sell inventory inventory the this have the have all important is Julie made we factored I the plans point, that

availability to targets gives from that perspective inventory it revenue the well-positioned us that year. for meet an So our confidence more we're

to the profitability. We've the and which pressure take think that -- might able a it through I to revenue approach some production actions taking been that balance that adjustments have change impact from the to we limits the of working make down up as aligned negatively go to demand. we're with time, over ramp to year, sensible down

go-to-market year, to prudent that, And rather we few profitability think in looking we gross gross maximizing XXXX the margin willing on for that do As some drive still that rate would a activities, ourselves of and strategy a at can prioritize gross that the next the share, than I ago, to year. minutes we up for it units we and so that dollars are do on growth LTFM showing commented beginning is execute rate. setting protect we over are while at which rate margin to committed margin that the plan

acts profitability but see relative I say inventory. you parts, down driving focus that to of driving a that would dollars won't lot no willingness probably to a moving with next So go again, But required unnatural year. on

time. at further right. no And in questions All are the there queue this

floor Mr. to or like Kramer back turn additional the would I remarks. over So to for any closing

support. We concludes the over busy it's shareholders so and appreciate you Thank appreciate Thank we with again. a shareholders once coming weeks for prospective day everybody's call. and know definitely to We and forward talking analysts you. That folks, We you look today's very months. listening.

teleconference, today's we concludes This gentlemen. your and appreciate and ladies you, Thank participation.

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